The Liverpool waterfront, a Unesco world heritage site Photograph: Alamy

Plans to create a "Shanghai-style" high-rise waterfront in Liverpool could threaten the city's world heritage status, according to an independent report.

The Unesco world heritage site takes in the elegant Edwardian "three graces" – the Royal Liver, Cunard and Port of Liverpool buildings – which have defined the skyline for almost a century.

But Peel Holdings wants to develop the northern docklands, with skyscrapers, thousands of apartments and a cruise ship terminal. The plans have come under fire from English Heritage. Part of the city's waterfront was granted world heritage status in 2004. At the time, Unesco said: "Liverpool is an outstanding example of a world mercantile port city, which represents the early development of global trading and cultural connections throughout the British empire."

Peel argues that the Liverpool Waters plan will regenerate former and disused dockland, create thousands of jobs and replicate the drama of Shanghai on Merseyside, even featuring a tall building called the Shanghai Tower.

But, the report, commissioned by English Heritage, warns that the relationship between the site and the river could be "severely compromised". It says the buildings will have "a significant damaging negative impact on the Liverpool world heritage site and its outstanding universal value". It concludes: "There is little to be found in the application which instils confidence that the Liverpool Waters scheme will be recognised internationally as innovative or a world leader."

It says the development risks overwhelming the defining characteristics of the area with opposing ones. It warns that the setting of key heritage assets such as the Victoria Clock Tower and the Stanley Dock tobacco warehouse will be damaged by development "that fails to respect fundamental notions of form and function".

Some of the impacts would be of a "major magnitude". The report also highlights four separate policies with which the planning application fails to comply.

Henry Owen-John, of English Heritage, said: "We believe that it is possible to come up with a creative and imaginative scheme of regeneration for the area without necessarily having these tall buildings [at Clarence Dock] that is still economically viable and diminishes the impact."

Peel, however, has said the report is flawed and has refused to agree to any demands to remove skyscrapers.

Lindsey Ashworth, its director of investments, told the Liverpool Daily Post: "It is not about making a profit. The opportunity is now. I think it is a shame that we cannot reach agreement. But we are right, and they are completely wrong."

The scheme is due to go before Liverpool council's planning committee later this year. If, and when, English Heritage objects, it is likely to be referred to Eric Pickles, the communities secretary, for a public inquiry.